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Investors keep a watchful eye on prices in the Shanghai Stock Exchange. China PMI data declined for the second month running. Photo: Xinhua

Update | Hong Kong shares slip but Macau casino operators post gains,while Shanghai shares edge up

Hong Kong stocks edged down on Monday as traders struggled to reconcile whether a steep slowdown in factory activity on mainland China would spur additional government stimulus to shore up the weakening economy.

In contrast to the drift in the broader market, shares of Macau casino stocks rose after some observers took comfort from gaming revenue figures for April that suggested a ray of hope for the down-beaten sector.

The city’s benchmark Hang Seng index fell 0.03 per cent, or 9.18 points, to end at 28,123.82, in volatile trading marked by swings of as much as 250 points. The Shanghai Composite index rose 0.87 per cent, or 38.81 points, to finish at 4480.46.

New orders at China’s factories declined at their fastest pace in a year while production levels stagnated, according to the monthly HSBC-Markit China Purchasing Managers Index. Mainland China’s PMI fell to 48.9 in April, down from 49.6 in March. A level below 50 indicates contraction.

China economic analyst Fraser Howie said there was a division between the fundamentals and the market. “[Investors think] if you have a weak economy that is a good thing as you have government stimulus,” Howie said.

In Hong Kong, property stocks rose in anticipation of future easing measures by the central government.

Evergrande Real Estate Group, one of the largest property developers on mainland China, was the second most heavily traded on Monday, jumping 7.43 per cent to HK$7.90. Sun Hung Kai Properties, the biggest Hong Kong property developer, jumped 4.11 per cent to HK$ 134.40, while shares in mid-cap mainland developer Shimao Property surged 8.61 per cent to HK$19.92.

Annabel Fiddes, an economist at Markit said: “The PMI data indicates that more stimulus measures may be required to ensure the economy doesn’t slow from the 7 per cent annual growth rate seen in the first quarter.”

The H-share index of mainland Chinese firms listed in Hong Kong, rose 0.19 per cent, or 28.04 points, to 14,459.15. Total market turnover was HK$ 158 billion, about HK$ 42 billion below April’s daily average.

Among the Macau stocks that gained on Monday, Sands China rose 3.46 per cent to HK$32.85 and Wynn Macau leapt 4.82 per cent to HK$16.54.

Macau’s gaming revenue for April dropped 39 per cent, the eleventh successive month of declines.

Revenue had fallen 39.4 per cent and 48.6 per cent in March and February, respectively, according to data from Macau’s Gaming Inspection and Coordination Bureau on Monday. In the first four months, revenue fell 37 per cent to 83.9 billion patacas.

Howie said that any recovery in Macau stocks would be gradual, as the earlier drop off in table earnings stemmed from Beijing’s anti-corruption campaign.

“If we do see a rebound in Macau then (Beijing) will send the corruption inspectors back down there. It’s hard to see how to get the growth back,” he said.

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